LOS GATOS, Calif., Oct. 1 /PRNewswire-FirstCall/ -- Netflix, Inc. (Nasdaq: NFLX) ended the third quarter of 2002 with approximately 742,000 total subscribers, approximately 12,000 subscribers above the high end of the Company's guidance of 730,000.Subscribers grew 122 percent year-over-year from 334,000 total subscribers at the end of the third quarter of 2001 and 11 percent sequentially from 670,000 total subscribers at the end of the second quarter of 2002.
New Trial Subscribers
Netflix acquired 277,000 new trial subscribers in the third quarter, a 159 percent year-over-year increase from the 107,000 new trial subscribers in the third quarter of 2001 and a sequential increase of 17 percent over the 236,000 new trial subscribers in the second quarter of 2002.
Of the 742,000 total subscribers at quarter end, 95 percent or 708,000 were paying subscribers.The other 5 percent, or 34,000 subscribers, were new trial subscribers. Paying subscribers represented 95 percent of total subscribers in the third quarter of 2001 and the second quarter of 2002.
Household penetration in the San Francisco Bay Area rose to 3.5 percent of households at the end of the third quarter of 2002, up from 3.2 percent of at the end of the second quarter of 2002.Household penetration in the rest of the country reached 0.63 percent at the end of the third quarter of 2002, up from 0.57 percent at the end of the second quarter of 2002.Market research firm NPDTechworld estimates that 36 percent of all U.S. households have a standalone DVD player as of the end of August 2002.
Average monthly churn for the third quarter of 2002 was 7.2 percent.This compares to average monthly churn of 6.7 percent in the second quarter of 2002, 7.2 percent in the first quarter of 2002, and 6.5% in the third quarter of 2001.Churn includes free trial subscribers as well as paying subscribers who elect not to renew their monthly Netflix subscription service.The increase in churn occurred broadly across the subscriber base and is primarily attributable to the Company making it easier for subscribers to cancel their Netflix service online instead of having to call an 800 number during regular business hours to cancel. "To grow a large business, you have to do right by subscribers and that includes allowing subscribers to cancel, if they so desire, with a minimum of hassle," said Netflix CEO Reed Hastings.
Third Quarter Earnings Release
Netflix will release its third quarter 2002 financial results on Thursday, October 17, 2002 after the market close.A webcast of the quarterly conference call will begin at 1:10 PM PDT and can be accessed via the web at www.netflix.com or at www.prnewswire.com.
Launched in 1998, Netflix is the world's largest online DVD rental service, providing more than 742,000 subscribers with access to a comprehensive library of over 12,000 DVD titles.For $19.95 a month, Netflix subscribers can rent as many DVDs as they want, with three movies out at a time, and keep them for as long as they like.There are no due dates and no late fees.DVDs are delivered directly to the subscriber's address by first- class mail from 11 distribution centers throughout the United States. The company also provides background information on DVD releases, including reviews, member reviews and ratings and personalized movie recommendations. For more information on the company, visit www.netflix.com .